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Congressional Leaders, Bush Administration
Agree on Framework of Bailout Plan
Sunday, September 28, 2008
AP
Sept.
28: Nancy Pelosi, Henry Paulson, Harry Reid, and Judd Gregg announce a
tentative deal on legislation regarding the financial crisis.
Sept.
28: Nancy Pelosi, Henry Paulson, Harry Reid, and Judd Gregg announce a
tentative deal on legislation regarding the financial crisis.
WASHINGTON —
After a breakthrough on a $700 billion Wall Street bailout deal,
lawmakers and the Bush administration now must settle the final details
on a rescue intended to keep credit flowing and avert a crippling
recession.
"We've made great
progress. We have to get it committed to paper so that we can formally
agree," House Speaker Nancy Pelosi told reporters in announcing the
tentative deal early Sunday.
Congressional leaders hope to have a House vote on the measure Monday, with a vote in the Senate coming later.
"We've
still got more to do to finalize it, but I think we're there," said
Treasury Secretary Henry Paulson, who participated in the negotiations
in the Capitol.
"We worked out everything," said New Hampshire Sen. Judd Gregg, the chief Senate Republican in the talks.
Democratic presidential nominee Barack Obama,
in a statement Sunday, said that "failure to deal with the current
crisis would have devastating consequences for our economy, costing
millions of Americans their jobs and retirement security."
Under
the plan, the government would purchase mortgage-backed securities and
other bad debts held by banks and other investors. The money should
help troubled lenders make new loans and keep credit lines open. The
government would later try to sell the discounted loan packages at the
best possible price.
At the insistence of House
Republicans, some money would be devoted to a program that would
encourage holders of distressed mortgage-backed securities to keep them
and buy government insurance to cover defaults.
The
legislation would place "reasonable" limits on severance packages for
executives of companies that benefit from the rescue plan, said a
senior administration official who was authorized to speak only on
background.
It also calls for the financial
sector to help make up the difference if the government does not recoup
its investment in five years, the official said, but details remained
unclear. The government would receive stock warrants in return for the
bailout relief, giving taxpayers a chance to share in financial
companies' future profits.
To help struggling
homeowners, the plan would require the government to try renegotiating
the bad mortgages it acquires with the aim of lowering borrowers'
monthly payments so they can keep their homes.
"I think it's a better deal for the taxpayers" than an initial proposal this past week from the White House,
said Sen. Lindsey Graham, a South Carolina Republican. The key, he
said, was getting House Republicans to come along after their earlier
opposition.
Added Sen. John Kerry, a Massachusetts Democrat: "I think we have accountability."
Despite
the changes made during an intense week of negotiations, the heart of
the program remains President George W. Bush's original idea: spend
billions of taxpayer dollars to buy mortgage-backed securities whose
value has plummeted.
Obama said he pressed for
several provisions that were in the agreement, including oversight by
an independent board and measures to help homeowners stay in their
homes. He said that if elected president, he will order a review to
ensure the plan is working.
Both Obama and his Republican rival John McCain spent time Saturday calling Paulson and key congressional negotiators
to discuss the bailout deal that has become a key issue in the
presidential race and will loom large in the next administration's
efforts to pull the country out of its economic crisis.
Graham and Kerry appeared on "Fox News Sunday."